Help With Simple Maths Question, Please

[barry1010]

I am rubbish at maths.
I keep a credit of at least £3000 in my gas/electric account every month paying in £500 per month. The balance never goes below £3k
I get at least £5 from the energy company as interest each month and £5 from my bank for simply paying £500 by direct debit. A minimum of £120 a year.

My question is - if I were getting this return from a bank what would the interest rate be?

[Peter Pedant]

around 4 %
120 over 3000 as a per cent

this comparison is a bit odd - payments and interests from various sources - - -welded into what per cent interest does this represent at a bank

[bhg481]

Peter is right and, of course, it's tax-free. If it were interest from a bank you MIGHT have to pay tax on it depending on your circumstances.

[Hopkirk]

My worry would be if the utility company went bust. (it does happen)

[Zacs-Master]

Why on earth would you keep a balance of £3k? You do realise they are making money on that, Barry?

[Peter Pedant]

Peter is right and, of course, it's tax-free. bhg

christ, bhg isnt going to last long on AB haw haw haw

[Zacs-Master]

Hey, this could work for Nigel Farage instead of him having a bank account!

[barry1010]

Zacs, they are paying me 5% interest, I don't suppose they are making much out of me. When I switched to Ovo interest rates from banks was rubbish.
I do pay tax on savings.

[barry1010]

I am trying to determine if this is still a good option for me now interest rates have risen

[Zacs-Master]

I would let any energy company make a cent out of me, on principle.

[bobbinwales]

//Why on earth would you keep a balance of £3k? You do realise they are making money on that, Barry?// I assume because of the interest received. I think Barry is trying to establish whether its a good deal compared to rates available else where. Of course it also depends if he needs ready access to the money or has debts at a higher rate

[Zacs-Master]

And PP has answered you…..depends on your personal circs.

[Zacs-Master]

‘Wouldn’t’ let in my previous answer, of course.

[barry1010]

That's it, bob. No debts, might need instant access but no plans to need it

[Zacs-Master]

It’s impossible to answer without knowing
a) which bank you intend to deposit into and what interest rate they’re currently paying.
b) what your current bank balance is and whether the £3k would put you into a higher rate of earning.
c) whether the £3k might trigger you being taxed.

[barry1010]

A. Any bank
B. Various bank and savings accounts. Maxed out on premium bonds. Won't go in to higher rate of earning
C. I pay tax on savings.

[barry1010]

I have the information I wanted now, thanks all.

[Gizmonster]

//// Zacs, they are paying me 5% interest ////

If the energy company is paying you 5% interest and you pay tax on your savings at 20%, you'd need a bank account that pays 6.25% gross ..... and if you find one, please let me know as the best I've seen recently is 5.9% fixed for 12 months.
It could be argued that you could match it in an ISA, as Charter Savings Bank is paying 5.2% fixed for 12 months .... which is tax free of course :)

[barry1010]

Thanks, Giz.